You can tap into that equity and then turn around and take those funds
and use them to buy investment real estate.
It's also a possibility, too, if you have a 401k with your employer.
You can go and possibly borrow up to $50,000 out of that 401k plan.
Hey, are you eager to dive in the world of real estate investing?
But you feel held back by lack of funds?
Well, don't worry. You're not alone.
Many of us dream of building wealth through real estate,
but often feel like the barriers to entry are just too high.
So in this video, we're going to shatter those barriers and explore
eight creative strategies tailored specifically for people like you
who want to start investing in real estate with limited financial resources.
All right. Let's get started.
All right.
So what is the easiest way to get involved in real estate
Investing if you have little to no money.
That is to partner with someone else.
Basically someone who has money.
Now, what's key here is if you're going to partner with someone,
you want to make sure that all parties interests are protected.
And the way you're going to want to do that is by setting up
a limited liability company. Let me show you what I'm talking about.
If you're looking to
partner with someone, we recommend you do is you set up a an LLC.
So this is going to be the entity that's going to take title of the property.
And so what you're going to have here is you're going to have
what I like to refer to as my money partner.
That's the person it's going to be bringing money to the deal.
And then you're going to have yourself over here
and you're going to be the project manager.
We'll call you the PM
because you're the one that's going to go out there
and find the real estate deals, because oftentimes these money partners,
they don't want to get involved in the day to day.
What they're looking for is a return on their investment.
So you're bringing in this money partner to help get this deal going.
And so what you're going to do
is you're going to, for the form, this joint venture operating agreement.
Now, when you're doing this, it's real key here
that when you're putting together this LLC, this operating agreement
needs to spell out very essential provisions
when it comes to how the property is going to be handled.
Because, for example,
is this going to be a fix and flip deal or is this going to be a long term hold?
Many times investors may not be willing to keep their money in a deal that long.
They want to get it out sooner.
So you have to factor that in to your overall operating agreement on how
this person is going to be taken out at some point in time.
But nevertheless, typically, if we set up an LLC,
then you have to determine what is going to be the ownership.
Is it going to be a 5050 split here or is it going to be something different?
And so you can actually get quite creative in these operating agreements
where you can actually give this investor here
who's coming in with the money a preferred return.
You could say, hey, listen, in order for you to put money into this deal
and fund this purchase for me, I am going to give you the first, say, 5%
of profits that come off the the property, and then we'll split the remainder,
50, 50, or maybe only do that for a certain period of time.
And so what I'm saying is that there's
many different options that are available when you partner with someone else.
And oftentimes,
if you know someone who has money, this is going to be the easiest way to do it.
But the biggest mistake I see investors make is by not setting up an LLC and
putting together an operating agreement that covers everyone's expectations.
Okay, another option you have would be to explore the use of a lease option.
Now, with a lease option, it's a little different here.
Let me just erase all this.
So in a lease option arrangement, what you're going to be doing
is you're
going to find a piece of property here that's actually owned by someone else.
So in this scenario, you're not actually buying the property.
What you're going to do is you're going to approach this person here
and you're going to enter into a lease agreement with it with this individual
that owns a property with an option to buy.
So what that means is that you're going to take control of this property.
Maybe this is a two year lease,
so you're going to take over control of the property.
And so what you're doing is
you're giving yourself time to either if you have bad credit, fix your credit,
or for a lot of investors, it's time to build up some cash so they can go out
and get traditional financing to buy this property from this seller.
The option agreement is critical because the option agreements
going to spell out what your purchase price is going to be for this property.
So, you know, ahead of time, if it's a two year lease with an option agreement,
this House may be in two years
if they agree to sell it to you, the seller for $125,000.
Great.
So I know depending on
how I'm going to qualify for this property, how much I need.
Now, the question is, for many people, where do I get the income?
Well, in an option this nature, many times
what this individual will do is they will sublease the property back out.
So you can sublease this back out to two
other parties, maybe within, say, Arizona and
Phenix, Arizona.
So it's next to ASU.
So you're going to rent the rooms to students.
So now you're bringing in three or four people here
and they're paying you collectively 500 green and 2ka month.
You're paying this person over here 1200 dollars a month.
So you're pocketing $800 a month under this.
So you're got a lease here and then you got a sublease on this site.
Many times this is referred to as a sandwich lease.
So you make the difference of $800, you multiply by it by 12.
That equals 90 $600 a year.
In two years, you'll have over $20,000, which is probably pretty close
to getting you the down payment to buy this property at 125,000.
Okay.
The third option you have when it comes to buying property with little to no money
is to consider seller financing or
consider a land contract.
Okay, so what is this?
That means that the property here
is owned by a seller, so you're going to approach the seller
and you're going to enter into a purchase and sale agreement to buy the property.
But the seller is going to serve as the bank, so they're going to be
the bank on this deal.
And so many times in those types of arrangements, it's
about figuring out what the seller's needs are.
Are they just looking for income?
Well, this is a great opportunity
because they don't want to sell the property right away
because they realize you don't have to pay a bunch of tax on that initial sale.
So they're finding you as a solution provider
who's coming up to the seller and saying, hey, I'm going to buy this property.
I'm going to make sure that you're going to get an income stream
because I'm going to be paying you for the purchase price, principal plus
interest for ten, 15 years, however long you negotiate that out.
Now, the difference between seller financing and a land contract,
if you're going to go down this road,
is that in seller financing, you actually take title to the property.
With the land contract, the seller continues to hold title to the property.
So you should be aware of both strategies when you approach a seller
that you think may be interested in this type of deal.
Because the land contract I would keep in my back pocket
just as a just as an aside if they weren't comfortable with the seller financing.
Because you can see the risk here.
If they sell you the property,
they transfer the deed to you, then if you don't pay, they have to foreclose.
Whereas if you do a land contract
because if a seller said, I'm not comfortable with that, say,
well, I'll tell you what, how about we keep the title in your name?
We can put together a land contract
where title doesn't transfer to me until I've paid the entire property off.
So now if I don't pay, you can just we'll call it foreclose on the contract
and you're in a very strong position that way.
So be aware of both of those strategies.
They're used very successfully by real estate investors
who are just getting started that don't have a lot of money
to put down by using the seller to finance the deal.
All right.
A fourth way in which you can get into real estate is what we call house hacking.
So let's say you're leasing out a property right now.
You're the tenant on that property and you have a few extra bedrooms.
Well, have you considered leasing those bedrooms out to start
generating additional revenue?
If you start bringing in that revenue
now, you can take those funds and use them as a down payment
to actually go out and get your first investment property
or maybe a personal residence house actually is a great tool
that's been utilized by a lot of individuals
who are just getting started in real estate to build up that nest egg.
Or better yet, you get into an agreement, or at least you are not a good listener,
but you purchase a piece of property and now you want to pay that mortgage off
so you don't have to pay anything.
Or you can pay it off much sooner because you have extra income coming in.
This is a perfect way for which you can do that
because you're going to be taking that house that you own.
Maybe it's
a32 house, three bedrooms, two baths, and you lease out two of the rooms.
So you have two tenants in the property with you,
but maybe they're paying you $800 a month that's covering your entire mortgage.
Now you're able to put more money aside in your savings to buy your next property.
Now, the fifth method for those individuals
who are looking to get started in real estate is to wholesale.
Now, wholesaling is a great starter strategy for individual
real estate investors because it doesn't require any out of pocket money.
It's just your time.
And with a wholesaling,
what you're doing is you're are finding some motivated sellers,
people who have property, they're looking to get rid of it.
Typically there's a lot of extra meat on the bones of what we'd like to say
is that you can flip that property to an investor who's going to want
to come in and rehabbing and you realize they can make money off it.
So the wholesaling, what they're doing is they're identifying opportunities,
tying those opportunities up under a purchase and sale agreement, then
finding an investor that will pay them to step into their shoes.
Now, if you're considering wholesaling some things to keep in mind, number one,
educate yourself about how to do this because it can get
a little complicated as far as the whole process is concerned.
So you want to make sure you're educating yourself.
Secondly, you want to make sure if you're using a business entity,
LLC, you don't want to sign on any contract
with a seller in your individual name because for whatever reason,
it doesn't go through, you may have liability.
Third, you want to make sure that you built up some investors.
You found network, you found people that are real estate investors
that are willing to buy the property because what they're going to do,
as I stated earlier, is you're going to show them this deal
that you have the right to close on, let's say, in 45 or 60 days.
And they're going to say to you, all right,
I'll take that deal off your hands.
And then they're going to pay you, say, $5,000 of a wholesale fee.
They're going to step into your shoes and then
they're going to close on the property.
So it's also imperative that when you're putting these deals together,
you're going to wholesale, as I stated earlier, you got to make sure there's
enough there for the investor so they can make money.
You never buy at the top of market or tie properties up at the top of the market
because it just doesn't work out.
You're not going to be able to flip that to an investor.
Okay. The last way in
which you can get started in real estate investing if you don't have a lot of money
is if you have assets, if you have a personal residence
and you have a lot of equity that's trapped in your property,
you can go out and qualify.
If you can qualify for a home equity line of credit, you can tap into that equity
and then turn around and take those funds and use them to buy investment
real estate.
It's also a possibility, too.
If you have a 401.
K with your employer, you can go and possibly borrow
up to $50,000 out of that 41k plan.
And that money can be used to start your real estate investing.
So the key here is, you know, your options, but more importantly,
start networking, start getting out there and local regroup, start talking
to other real estate investors so you can start building up your opportunities.
That is key as your real estate investors to creating those networking
groups of individuals that you can establish
that will create deals for you or create deal flow critical when it comes
to being a real estate investor.
If you want to learn more about how to put a plan into action
and properly structure all of your real estate investments,
you can register
for our Free Tax and Asset Protection Live event at the link below.
Guys, on this event I'm going to be teaching you all
about how to use limited liability companies.
Land Trust Corporation Series LLC Statutory
Trusts 401k Plans to invest in real estate.
And then you're going to layer in wholesale strategies subject to investing,
buying property on seller financing.
You going to learn all about that,
and you're also going to learn about the tax side of investing
where you can reap massive tax benefits from owning real estate.
But more importantly, we're going to bring our attorneys and CPAs to this event
where you can ask them specific questions about your individualized situation.
Look forward to seeing you there.